Last month, the city police had arrested the brokerage firm’s chairman and MD, C Parthasarathy.
According to police, the probe has allegedly revealed Parthasarathy and the arrested CEO of KSBL, Singh, who was incharge for trading and broking, unauthorizedly executed trading in nine other companies trading accounts from 2014 to 2019. Meanwhile, the arrested CFO Krishna Hari allegedly diverted funds. “These were raised from banks by pledging client securities as collateral to nine shell companies as per the oral instructions of Parthasarathy for showing huge turnover and market share of KSBL in Stock Market and caused huge loss of Rs. 300 crores which was shown as book debts,” the detective department of the centre crime station (CCS) unit of the Hyderabad police said in a press release. “…Further several criminal cases were registered at CCS DD Hyderabad against the accused company and others. The above accused persons were arrested and produced before the magistrate court which remanded them to judicial custody,” the release further added.
Their lawyers were not immediately available for comment.
While the said arrests were made on the complaint given by
for defrauding them of Rs.137 crore a similar complaint has been lodged by ICICI bank also. According to the complaint lodged by the bank, the accused brokerage firm availed a credit facility of Rs.137 crores from the complainant bank by pledging securities and personal guarantee of Parathasathy. However it suppressed the fact that they actually belonged to the clients, the police said.
“In the said case, this was done without their consent and misusing the power of attorney. The securities were transferred into the demat account of KSBL and pledged before the bank for margin and short term requirement in the business of KSBL from March, 2013,” the police said in a press release.
The probe by the detective department of the centre crime station (CCS) unit of the Hyderabad police revealed that Rs 1.500 crores were diverted by Parthasarathy either for the purpose of evergreening of loans or for proprietor trading.
“Investigation has revealed that the accused diverted Rs.720 crores of client finds which were lying in the banks accounts linked with their trading account. Another Rs 680 crores were taken as loans by the accused from various banks and other NBFCs by pledging client securities without their consent,” assistant commissioner of police, SV Hari Krishna told ET at an earlier occasion.
In November, 2019, SEBI had revoked the pledge of securities with banks and NBFCs and returned the securities.
Other than the city police, KSBL is also being probed by the Ministry of Corporate Affairs (MCA) for alleged irregularities under the Companies Act.